TODAY’S GAME PLAN: from the trading
desk, this is not research
TODAY’S ECONOMIC DATA: 8:30ET Chicago Fed Nat Activity Index, Durable Goods Orders; 10:00ET Consumer Confidence,
US November New Home Sales; 1:00ET $69 billion 2-year note auction
Highlights and News:
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Panama Rebuffs Trump’s Plan to Control Canal
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Honda and Nissan said they planned to merge in 2026
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Biden commutes the sentences of nearly all federal death row inmates
Global stocks nudged higher after cooler inflation data in the US helped alleviate concerns following the Federal Reserve’s hawkish rate cut. Still, expectations
of further trade tariffs by Donald Trump and thin liquidity heading into the holiday season kept a lid on overall sentiment. After a recent central bank decisions bonanza, this week only has the minutes of a few of those meetings, while there are no Federal
Reserve speeches and US data is secondary. Data on Friday showed investors liquidated equity funds at the fastest rate in 15 years in the week to Dec. 18 . Investors divested a net $37.2B worth of global equity funds in the week, the largest amount for a
single week since September 2009. Investors pulled a net $50.2 billion from US equity funds in the week ending Dec. 18, the biggest net outflow since Sept. 2009. European and Asian funds, however, experienced $9.21 billion and $1.74 billion worth of net purchases.
EQUITIES:
US equity futures are mixed in subdued trading as investors looked to the holiday-shortened week and the traditional ‘Santa Claus rally’ to pull stocks out of their December downturn.
Wall Street’s ‘Santa Claus Rally’ has typically boosted stocks by around 1.3% over the final five trading days of the year and first two of the next year. President Biden signed funding legislation to keep the US government operating until mid-March, avoiding
a year-end shutdown and kicking future spending decisions into Trump’s presidency. Xerox Holdings said today it would buy Lexmark International, the maker of printers and printing software, in a $1.5 billion deal.
Futures ahead of the bell: E-Mini S&P +0.1%, Nasdaq +0.5%, Russell 2000 -0.1%, DJI -0.3%.
In pre-market trading, Rumble (RUM) jumps 43% after the video-sharing platform said Tether is set to acquire a stake in the company for $7.50/share. Applied Therapeutics (APLT) falls
3% after William Blair stepped away from its bullish rating due to increased uncertainty around the future of the Govorestat drug and a limited cash runway. Despegar.com (DESP), a Latin American online travel agency, jumps 31% after Prosus entered into a definitive
agreement to acquire the booking site. Playa Hotels & Resorts (PLYA) rises 11% after executing an exclusivity agreement with Hyatt Hotels Corp. Qualcomm (QCOM) rises 2% as the company prevailed at trial against Arm Holdings Plc’s claim that it breached a license
for chip technology. Rigetti Computing and other stocks linked to quantum computing rise on optimism over Alphabet’s Willow chip capabilities. Rigetti (RGTI) +13%, D-Wave Quantum (QBTS) +18%. Xerox (XRX) rises 2% after agreeing to buy the laser printer maker
Lexmark International from a consortium of Asian investors in a deal valued at $1.5 billion.
European gauges move into positive territory after recouping early losses. The Stoxx 600 index turned slightly higher as drugmaker Novo Nordisk A/S staged a partial
recovery from the biggest slump in more than two decades on Friday. Health care stocks outperformed as Novo rallied 9%. Meanwhile, the travel and leisure sector slid as Evolution AB slumped after the UK Gambling Commission began a review of its Malta operations.
Direct Line Insurance Group shares rose after Aviva Plc agreed to buy the insurer. Stoxx 600 +0.4%, DAX +0.02%, CAC +0.2%, FTSE 100 +0.3%.
Shares in Asia rebounded from last week’s selloff, as tech shares rallied after US inflation data supported the case of further interest-rate cuts by the Federal Reserve
next year. The MSCI Asia Pacific Index advanced 1.1% for its first gain in seven sessions, with TSMC and Toyota Motor among the biggest contributors. Stocks in Taiwan led gains in the region, after AI powerhouse Nvidia Corp.’s Friday rally and local media
reports boosted investor sentiment. Honda and Nissan formalized their merger talks and pegged a 2026 completion date for the historic tie-up, helping lift shares in Japan. Taiwan +2.6%, Philippines +2%, ASX 200 +1.7%, Indonesia +1.6%, Thailand +1.6%, Kospi
+1.6%, Nikkei 225 +1.2%, Singapore +0.9%, Hang Seng Index +0.8%, Sensex +0.6%, Vietnam +0.4%, CSI 300 +0.15%, Shanghai Composite -0.5%.
FIXED INCOME:
Treasuries are slightly cheaper across the curve, following wider losses seen across core European bonds over early London session after ECB President Christine Lagarde
said in an FT podcast that policymakers remain alert to lingering price pressures in the services sector. US session focus includes the start of this week’s auctions which kick-off with 2-year note sale today, followed by 5- and 7-year notes Tuesday and Thursday.
10-year yield is +3bps around 4.55%; 2s10s and 5s30s spreads are roughly 1bp steeper on the day.
METALS:
Gold eased after climbing over 1% on Friday, as traders weighed the outlook for monetary policy after the Federal Reserve’s preferred measure of underlying inflation
came in below expectations last week. Spot gold -0.3%, Silver +0.2%, Copper +0.1%.
ENERGY:
Oil prices are modestly lower, extending last week’s decline in response to a surging US Dollar and worries about the outlook for demand, particularly from China.
Traders are also weighing President-elect Donald Trump’s threat to reimpose control over the Panama Canal. Trump said the key waterway — through which roughly 2% of global oil supply flows — is charging “exorbitant” fees, a claim that Panama’s president rebuffed.
Hedge funds are growing more bullish on the outlook for crude, with the increase in net-longs for WTI rising by the most in over a year in the week to Dec. 17, according to exchange data. WTI -0.5%, Brent -0.5%, US Nat Gas +2.2%, RBOB -0.15%.
CURRENCIES:
In currency markets, the dollar moves higher after the US government narrowly averted a shutdown and Trump got into a feud with Panama over canal control. Sterling
fell after data showed the UK economy failed to grow in the third quarter, according to revised estimates that suggest the slowdown has been sharper than expected since Labour took office. US$ Index +0.5%, GBPUSD -0.4%, EURUSD -0.3%, USDJPY +0.4%, AUDUSD -0.2%,
NZDUSD -0.3%, USDCHF +0.5%, USDCAD +0.25%.
Spot Bitcoin +1%, Spot Ethereum +2.2%.
Colors within the report:
Green is always the 200 period (day, week).
Red is always 21,
Blue = 50,
Brown =
100 *Stars have added importance
- Upgrades
- Aclaris (ACRS) Raised to Buy at HC Wainwright; PT $20
- GCM Grosvenor (GCMG) Raised to Overweight at Piper Sandler; PT $14
- Potlatch (PCH) Raised to Outperform at Raymond James; PT $45
- Weyerhaeuser (WY) Raised to Outperform at Raymond James; PT $32
- Downgrades
- Applied Therapeutics (APLT) Cut to Market Perform at William Blair
- Canadian Western Bank (CWB CN) Cut to Hold at Desjardins; PT C$60
- Innovative Industrial (IIPR) Cut to Neutral at BTIG
- Initiations
- Boston Scientific (BSX) Rated New Buy at Fosun Hani; PT $103.75
- Danaher (DHR) Rated New Sector Perform at Scotiabank
- Engene Holdings (ENGN) Rated New Buy at HC Wainwright; PT $25
- Exelixis (EXEL) Rated New Buy at Brookline Capital
- Marvell Technology (MRVL) Rated New Overweight at Huatai Research
- MINISO (MNSO) ADRs Rated New Buy at 86Research; PT $35
- NCR Atleos (NATL) Rated New Buy at Compass Point; PT $57
- Pony AI (PONY) ADRs Rated New Buy at Goldman; PT $19.60
- Prologis (PLD) Rated New Buy at BOCOM Intl; PT $134.94
- Sanara Medtech (SMTI) Rated New Buy at HC Wainwright; PT $50
- Thermo Fisher (TMO) Rated New Sector Perform at Scotiabank
- Waters (WAT) Rated New Sector Perform at Scotiabank
Data sources: Bloomberg, Reuters, CQG
David Wienke
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